AT&T and Verizon pushed for numbers-based Universal Service Fund contribution, in a meeting Wednesday with the Wireline Bureau, according to an ex parte. They filed a joint plan detailing how a numbers regime would work. A numbers scheme would base USF contribution on the quantity of phone numbers the carrier owns. Currently, the FCC collects USF based on interstate revenue. AT&T and Verizon’s proposal “will benefit consumers, stabilize the universal service contribution base, and significantly reduce the administrative cost and complexity of [USF] contribution for the FCC,” Universal Service Administrative Co. and contributors, the carriers said.
Only audio bridging service providers supported two petitions to reconsider and clarify a June order that would force Intercall and other audio bridging companies to pay into universal service (CD Aug 12 p10). Unsurprisingly, Intercall backed the petitions, urging the FCC to declare audio conferencing an information service. Multi-Point Communications, another audio-conferencing provider, termed the FCC order “procedurally defective,” because it didn’t give “appropriate notice and comment to the teleconferencing industry.” The FCC provided 11 days to comment, and Multi- Point “was given only last-minute notice that it must adopt and implement procedures to fulfill its new [USF] obligations,” it said. Meanwhile, Verizon demanded that the petition be rejected outright. “There are no grounds for reconsideration,” the carrier said. The petitioners didn’t participate in the initial proceeding, they raise no new questions of law or fact and their arguments lack merit, it said. Others asked the FCC to clarify that the Intercall order changed no rules. Cisco said it believes the Intercall order confirmed existing FCC rules, but could be misread as rewriting them. It urged the FCC to make clear that the former -- and not the latter -- is true. The FCC “should confirm that this decision applied existing precedent, and did not adopt a new test for what constitutes an integrated information service,” said the VON Coalition. Also, the FCC should clarify the decision’s scope and say that it doesn’t cover information services including a functionally integrated voice communications function, the Coalition said.
The FCC should more narrowly target Universal Service Fund high-cost support, Embarq said. In a Wednesday meeting with the Wireline Bureau, the carrier proposed new high-cost support reforms that it said would boost broadband deployment, stabilize support for carriers of last resort and leave the door open for further USF reform. Embarq urged the FCC to be explicit in targeting support using wire centers, rather than implicitly targeting it through study area averaging. “The use of average cost calculations assumes that a CoLR’s rates will be averaged and, therefore, that higher returns in low-cost areas will offset negative returns in high-cost areas,” Embarq said. “Competition has invalidated this assumption, however, as competitors charge lower rates and win customers in low-cost areas, thereby reducing the CoLR’s revenues and eliminating the higher returns that were implicitly subsidizing the below-cost service in high-cost areas.” Embarq suggested that the FCC replace today’s non-rural high-cost support mechanism with a new “Broadband and Carrier-of-Last-Resort Support (BCS) mechanism that supports wire centers with average loop costs greater than a national benchmark.” Once established, the BCS would be capped at its initial level, rising only through FCC action, the carrier said. The FCC would need no new USF funding to create the BCS, Embarq said. Instead, money would come by adding access replacement funds received by wireless carriers, it said. The proposal promotes broadband deployment because BCS support recipients in price-cap areas would commit to building out a minimum of 1.5 Mbps broadband in at least 85 percent of their wire center lines, Embarq said. To keep CoLR service affordable, recipients also would commit to providing local service at rates meeting an FCC- designated benchmark. Failure to meet the benchmark would mean forfeiting the difference between its actual rate and the benchmark, multiplied by the number of lines served, Embarq said. The company’s proposal “would not necessarily take support away from wireless CETCs,” unlike the FCC’s reverse auctions proposal, Embarq said. “Rather, these CETCs would be eligible for support under the new BCS mechanism, provided they meet the conditions to build out network throughout each supported wire center and meet the broadband commitment in those wire centers.” Embarq plans to file a full proposal and support documents this week, it said.
Rate-of-return incumbent carriers should be allowed to allocate federal Universal Service Fund audit costs solely to interstate operations, said the National Telecommunications Cooperative Association. In a Friday petition, NTCA urged the FCC to clarify and/or waive a rule on how rate-of-return carriers should assign USF audit costs via the jurisdictional separations process. “Federal USF audit expenses are solely interstate in nature,” NTCA said. “Consequently, it is appropriate that those expense be allocated to the interstate jurisdiction.” Rate-of-return carriers now can be denied recovery of federal USF audit expenses if a state declares the costs to be “clearly interstate in nature,” NTCA said. “Should these carriers not be allowed to recover all of the costs spent on USF audits, their ability to serve their customers will be impaired, to the detriment of the public interest.”
The FCC should ignore recent AT&T and Verizon proposals asking it to preempt states on intercarrier compensation, the National Association of Regulatory Utility Commissioners said. The carriers asked the FCC to “reaffirm” that all regulated VoIP services fall under federal jurisdiction. In a Tuesday letter, NARUC said the requests “mischaracterize the current state of both the law and the facts with respect to non-nomadic VoIP traffic.” The FCC never found fixed VoIP subject to federal preemption, and the 8th U.S. Appeals Court in St. Louis has affirmed that, the group said. “Because there is no question it is possible to separate intrastate non-nomadic facilities-based VoIP calls from interstate calls, the FCC has no jurisdiction over such calls.” NARUC also disputed the carriers’ request for a uniform intercarrier compensation regime applicable to all traffic. The FCC has no power to do that “through preemption or without instigating a substantial increase in State or federal universal service funds,” NARUC said. Nor can the FCC use federal funds to reduce intrastate access charges without changing separations rules, it said. “Any such proposed changes must be referred to the Federal-State Joint Board on Separations before any final FCC rules can be adopted.”
Maritime radio service providers must pay into the Universal Service Fund, the FCC said Tuesday. The agency denied a Maritime Communications request that it review a Universal Service Administrative Co. decision denying two other radio providers’ joint request for refund of $1.3 million in USF contributions. Automated maritime telecommunications service is a commercial mobile radio service, and FCC rules say CMRS must contribute to USF, the agency said.
Sen. Barack Obama, D-Ill., supports a net neutrality law empowering the FCC to pursue discrimination complaints against network operators, Obama technology advisor and ex- FCC Chairman William Kennard told C-Span’s Communicators. Kennard termed recent FCC censure of Comcast for blocking file sharing traffic a “tentative” first step, but said agency jurisdiction is “murky” and could lead to lengthy legal appeals.
Qwest received $28.5 million in assistance from the universal service program’s high-cost fund in 2007, the company told House Oversight Committee Chairman Henry Waxman, D-Calif., in a letter Monday. Waxman had asked Qwest and 23 other carriers to respond by Monday to questions on how they spend USF subsidies as part of an ongoing inquiry (CD July 28 p6). Waxman is concerned that phone customers are paying surcharges of 11 percent or more to support the fund, he said. Several carriers told us Monday they did not want to release their responses to Waxman, although they had completed the letters. Qwest said it received no high-cost assistance in rural states such as Iowa, New Mexico and North Dakota. “Qwest’s region-wide support … equals the amount of support provided to non-rural eligible telecommunications carriers in West Virginia and was just one-seventh of the non-rural high cost support awarded in Mississippi,” said a letter to Waxman from Shirley Bloomfield, Qwest’s senior vice president of federal relations. The carrier told Waxman that high-cost support should be targeted to rural areas served by non-rural ILECs.
If the FCC cuts access fees as it overhauls intercarrier compensation, the agency will probably include an access charge replacement mechanism for rural local exchange carriers, said Medley Global Advisors analyst Jessica Zufolo in a Monday note. “There is currently considerable sympathy at the FCC toward the RLEC industry,” Zufolo said. But a changing and uncertain political atmosphere means RLECs might be forced to compromise by year end on compensation and the Universal Service Fund, she said. RLEC advocate Sen. Ted Stevens, R-Alaska, may not return to Congress given his recent indictment, while the House is increasingly scrutinizing USF high-cost support, she said.
Universal Service Administrative Co. audits impose an “unnecessary burden” on small rural telecom companies, said the Gardonville Cooperative Telephone Association. In a letter to FCC Chairman Kevin Martin, the group said the Office of Inspector General should set audit procedures for USF oversight. “Such standardized procedures would go a long way toward mitigating concerns about the inconsistency of the current process,” it said. The association said auditors contracted by the Universal Service Fund high-cost program “are often entirely inexperienced, with little or no knowledge of the telecommunications industry and FCC cost accounting rules.” Auditors are “extremely inflexible” on audit dates and document deadlines, it said. The group worries about the reporting of audit findings, it said. “In the most recent round of audits, the amount of funds estimated to be potential improper payments far exceeded the actual amounts found in the audits,” it said. And rural telecom providers fear USF audits may lead to accusations of Customer Proprietary Network Information violations, the group said. For example, auditors have demanded copies of customer billing records, it said: “These requests naturally place company management in an awkward position of determining whether to comply with auditors’ demands, or violate the law.” The FCC should clarify whether and to what extent auditors may access CPNI, it said.